Email of the day (2)
Comment of the Day

October 25 2012

Commentary by David Fuller

Email of the day (2)

On nuclear not remaining competitive:
"Thought you might be interested in the effect of low natural gas prices in the US. A nuclear plant near our town is shutting down because it can't be competitive."

David Fuller's view Many thanks for the article. Here is the opening:

(Reuters) - Dominion Resources Inc plans to shut its Kewaunee plant in Wisconsin in the second quarter of 2013, the first U.S. nuclear plant to fall victim to the steep drop in power prices as rising natural gas production redefines U.S. power markets.

Virginia-based Dominion said on Monday it intends to take a third-quarter after-tax charge of $281 million to decommission the 566-megawatt plant, which will close in the second quarter of 2013. Dominion shares fell 1.2 percent to $52.87 in late-morning trade.

The shutdown is pending a grid reliability review by the Midwest Independent Transmission System Operator (MISO), which operates the Midwest power grid.

Power prices in the U.S. Midwest and across the nation have plunged to 10-year lows this year due to surging U.S. natural gas output and weak demand due to the struggling economy.

Natural gas' share of total U.S. generation has increased to 30 percent this year from about 20 percent in 2006 as record shale gas production pushed gas prices to 10-year lows in the spring, making other fuels like coal uneconomic in some areas.

Kewaunee is the first nuclear plant to shut its doors due to competition from natural gas. Production has jumped in recent years as new technologies like horizontal drilling and hydraulic fracturing, or "fracking," enable energy companies to tap the United States' vast shale reserves.


Despite the planned shutdown of Kewaunee, Farrell said Dominion, which owns reactors in Virginia and Connecticut, still firmly believes nuclear energy must play an important part in the nation's energy future.

"The situation Dominion faces at Kewaunee is the result of circumstances unique to the station and do not reflect the nuclear industry in general. The nation will be hard-pressed to meet its energy needs, let alone do so in a secure and affordable manner, without a robust and growing nuclear energy program," Farrell said.

Dominion is one of the biggest power generating companies in the United States, with about 27,400 MW of capacity. The company also serves close to 6 million utility and retail energy customers in 15 states.

Natural gas remains the fuel of choice, not least in the USA where it is cheapest. Old nuclear (the Kewaunee plant was built in 1974) is obsolete. My fear, stated both before and after Fukushima was that a serious accident would set the industry back for a decade.

That remains my view but new nuclear, increasingly developed and utilised by China and other emerging growth economies, will lead the industry's long-term recovery. New nuclear plants will be cheaper, more efficient and much safer. If green energy is the objective, new nuclear ticks more favourable boxes than any other major source of power, in my opinion.

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